27/2/26

How much does the ‘single tax’ hurt your investments?

Couples are more likely to invest as they get older, but it’s not the same for those on their own

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This article is republished from The Financial Times

My partner and I happily share our lives together, but better still, we also get to share our ever-increasing living costs.

By contrast, single people have to stump up 100 per cent of the bills, rent or mortgage — aka the “single tax”.

Yes, you might get a single person discount on your council tax or water rates, but this is by no means enough to correct the imbalance.

By the end of the month, the average couple without children has over 12 times more cash left over than single people living on their own.

By the end of the month, the average couple without children has over 12 times more cash left over than single people living on their own.

Couples are able to set aside 12 per cent of their income for the future, compared with a paltry 1 per cent for singletons — a problem known as the single investment gap.

Singles are less likely to invest their long-term savings, with just 32 per cent doing so compared with nearly half (48 per cent) of couples, according to the latest Hargreaves Lansdown Savings and Resilience Barometer compiled by Oxford Economics.

As you might expect, couples with children and single parents also have large strains on their family budgets.

But the average single person holds just over a quarter of the cash savings that each half of a couple holds individually, and singles with stocks-and-shares Isas have an average balance of £2,900, compared with £6,600 for each half of a couple.

This problem compounds over time.

While couples are more likely to invest as they get older, the same isn’t true for singles.

While couples are more likely to invest as they get older, the same isn’t true for singles.

When people are younger, on lower incomes and perhaps more focused on saving up for a property deposit, investing is less of a priority, says Sarah Coles, head of personal finance at Hargreaves Lansdown.

Only 43 per cent of couples aged 20 to 40 invest outside pensions, which is not dramatically higher than the 32 per cent of single households in the same age bracket.

But by the time couples are aged 55 and over, the majority — 58 per cent — are regularly investing, compared with just 33 per cent of single people.

As someone who was single for most of my 20s, this resonates with me.

I managed to buy a London flat with no parental help on my single salary as a journalist, as I did so before the financial crisis, and barely needed a deposit.

The government’s Rent a Room Scheme tax break helped, but the £7,500 you can make tax free from doing so has been frozen since 2016 (had it risen in line with inflation, it would be worth over £10,000 today).

When you consider how the cost of renting has rocketed, this is particularly unfair.

More single people rent rather than own their own homes, so rising rental costs have an outsized impact.

A recent Royal London study found that 39 per cent of single people rented compared with 13 per cent of married couples and civil partners.

A study found that 39 per cent of single people rented compared with 13 per cent of married couples and civil partners

Saving a large enough deposit to buy is another challenge — and if you do buy solo, you’re more likely to buy a flat and be a leaseholder, facing high and unpredictable costs.

While I clambered on to the property ladder in my 20s, I didn’t start a pension until I was 30, and my stocks-and-shares Isa came after that — though I’ve been making up for it ever since.

Ambitious single people who try to out-earn this problem have frozen income tax thresholds to contend with, plus the nasty shock of what is, in effect, a 60 per cent tax rate if they earn more than £100,000.

But the aversion to investment is not solely down to a lack of funds.

“Even when single people do have some money they can afford to set aside, they often struggle with the perception of investment risk,” says Coles.

Cash just feels like a safer bet.

Those who have never invested often fear they could lose everything outright, but fail to grasp the risk of losing out on inflation-beating investment returns.

Whenever I post on social media about the impact of the single tax, it always generates a welter of responses.

My single followers in their 40s and 50s tell me they are especially worried about the risk of redundancy.

What AI could do to older workers’ job prospects is their number one fear, as they don’t have the safety net of a partner’s salary.

An important glimmer of hope is the growing trend for Gen Z to start investing at a much younger age than previous generations.

Younger single followers who are investing tell me they learned about the importance of getting started young on social media (Reddit is popular).

“My advice is contribute as little and often as you can,” says one investor in her 20s.

“If you get a pay rise or a bonus, top up what you’re investing. I’ve finally paid back my student loan, and now I’m investing that £326 a month into future me.”

Singles able to live rent-free with their parents and work full-time tell me they are investing a lot more.

Over time, this could even out some of the inequalities, but big challenges remain.

Sarah Pennells, a consumer finance expert at Royal London, points out that the latest ONS statistics predict one-person households will see the biggest increase over the next decade, with a near 20 per cent rise forecast by mid-2032.

It figures that more people will rent privately in retirement, but previous studies have shown the average renter would need to have accumulated a quarter of a million pounds more in their defined contribution pension by the time they retire to cover the cost than an owner occupier who can live mortgage free.

The financial odds may be stacked against singles, but it pays to be picky when choosing a life partner.

An increasing number of my contemporaries now find themselves single after a costly divorce, taking the concept of the single tax to new and frightening levels.

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